Bush Readies Speech on Ethanol, Climate Change

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President Bush's annual speech to Congress next week is likely to call for a massive increase in U.S. ethanol usage and tweak climate change policy while stopping short of mandatory emissions caps, sources familiar with White House plans said Tuesday.

WASHINGTON -- President Bush's annual speech to Congress next week is likely to call for a massive increase in U.S. ethanol usage and tweak climate change policy while stopping short of mandatory emissions caps, sources familiar with White House plans said Tuesday.

Bush's annual State of the Union address is expected to touch on key energy policy points, after Bush made the surprise pronouncement during last year's address that the United States is addicted to Middle East crude oil supplies.

A rising focus on "energy security" by both the Bush administration and Congress has added momentum to efforts to employ home-grown fuel sources like ethanol to reduce U.S. dependency on oil imports.

Following that theme, Bush is likely to call for more U.S. usage of home-grown supplies of ethanol, the sources told Reuters on condition of anonymity.

Iowa -- which grows more corn than other U.S. state -- is also a key stop for candidates in the upcoming 2008 presidential elections.

One source briefed by White House officials said Bush's speech Jan. 23 could call for over 60 billion gallons a year of ethanol to be mixed into U.S. gasoline supplies by 2030.

That would be a massive increase from the 7.5 billion gallons of ethanol use by 2012 required by current U.S law.

"I think it's going to be a big number," the source said on condition of anonymity. "It's in the ballpark of even above 60 billion (gallons) by 2030."

A White House spokesman declined to comment on the details of the speech.

POLICY ON GLOBAL WARMING

The White House on Tuesday confirmed that Bush's speech will outline a policy on global warming, but said Bush has not dropped his opposition to mandatory limits on heat-trapping greenhouse-gas emissions.

Some industry officials and media reports speculated that Bush would agree to mandatory emissions caps in an effort to combat global warming, reversing years of opposition to mandatory caps. But the White House denied this.

"If you're talking about enforceable carbon caps, in terms of industry-wide and nation-wide, we knocked that down. That's not something we're talking about," White House spokesman Tony Snow said at Tuesday's media briefing.

Britain's "The Observer" newspaper reported Sunday that senior Downing Street officials, who were not named, said Bush was preparing to issue a changed climate policy during the speech.

U.S. allies such as Britain and Germany have pressed for a new global agreement on climate change to replace the Kyoto Protocol which expires in 2012. Bush withdrew the United States from the protocol in 2001, saying its targets for reducing carbon emissions would unfairly hurt the U.S. economy.

The speech is a moving target and White House officials are known to make last-minute tweaks.

Last year, White House political advisors added the "addicted to oil" remarks only hours before Bush spoke.

Investors hope Bush will embrace biofuels in his speech.

"I would like him to set a very aggressive target for renewable fuels," top Silicon Valley venture capitalist Vinod Khosla told the Reuters Global Biofuel Summit on Tuesday.

(Additional reporting by Caren Bohan in Washington and Mary Milliken in Los Angeles)